“Kenyan President Ruto Discusses Tax Hike Withdrawal with IMF Chief Amid Protests”

Date:

NAIROBI, July 4 (Reuters) – Kenyan President William Ruto engaged in a phone conversation with International Monetary Fund (IMF) chief Kristalina Georgieva shortly after retracting proposed tax increases amounting to $2.7 billion in response to recent deadly protests, according to diplomatic sources.

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The finance bill containing these tax hikes was pivotal to Kenya’s policy reforms under a $3.6 billion IMF lending program. Analysts foresee potential setbacks in meeting program targets following the bill’s withdrawal, despite Kenya’s recent ability to repay a $2 billion bond with a newly issued seven-year bond.

Young Kenyan protesters have directed significant criticism at the IMF, accusing it of advocating for the tax hikes. Diplomatic sources, speaking anonymously, indicated that major donors aligned in urging the IMF to display flexibility on program targets, given the void left by the bill’s removal.

Moreover, one source stressed the importance of Kenya demonstrating a commitment to curbing wasteful expenditure, combating corruption, and enhancing accountability in exchange for IMF flexibility. Although an initial staff-level agreement between Kenya and the IMF was reached in early June to complete the program’s seventh review, final approval from the IMF’s Executive Board is pending.

Responding to inquiries about the call, an IMF spokesperson reiterated their concern over recent events in Kenya and affirmed ongoing constructive dialogue with Kenyan authorities. In contrast, Ruto’s spokesperson declined to comment.

Following the bill’s shelving, Ruto has proposed austerity measures in a supplementary budget while hinting at increased borrowing for the fiscal year 2024/25. The IMF has reiterated its commitment to aiding Kenya through its economic challenges, with potential disbursements likely toward the year’s end pending a new reform plan presentation from Kenya.

Amid ongoing anti-government demonstrations since the bill’s withdrawal, a government-backed human rights group reports at least 39 fatalities since mid-June, although recent protests have seen reduced participation.

By Naija247news
By Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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